Layer Two Liquidity

Definition ∞ Layer Two Liquidity represents the available capital and trading depth present on scaling solutions built atop a main blockchain, such as rollups or sidechains. This liquidity is essential for facilitating efficient transactions and services on these secondary networks. It enables faster and cheaper operations compared to the congested base layer.
Context ∞ Crypto news regularly highlights the growth of layer two liquidity as a vital component for addressing blockchain scalability limitations. The migration of assets and users to layer two solutions is a significant trend, aiming to enhance overall network capacity and user experience. Discussions often center on the security, decentralization, and interoperability of these scaling environments.